* Dominion owns minority of Rio Tinto's Diavik diamond mine
* Rio has said it may exit diamond business
* Dominion dropped Harry Winston name on jewelry unit sale
TORONTO, April 4 Dominion Diamond Corp
has the means to buy Rio Tinto's majority stake in the
Diavik diamond mine in northern Canada if the price is right,
Dominion's chief executive said on Thursday.
Global miner Rio has said it may pull out of the diamond
business, and Dominion, formerly Harry Winston Diamond Corp,
already owns 40 percent of Diavik, in Canada's Northwest
"I think we have certainly got the head room to undertake a
transaction with Rio on Diavik, should that be available at the
right price," Dominion CEO Robert Gannicott said on a conference
call with analysts and investors. He was responding to a
question about whether Dominion's balance sheet could support
such a deal.
Toronto-based Dominion said late Wednesday that its sales
rose in its fiscal fourth quarter, helped by an 11 percent
increase in the price of rough diamonds. Operating profit from
continuing operations fell, hurt by transaction costs.
Dominion agreed in January to sell its luxury jewelry
business to Switzerland's Swatch and focus on mining,
and it renamed itself Dominion Diamond.
That followed a separate deal to buy BHP Billiton's
stake in the Ekati diamond mine, also in the Northwest
Territories. That deal is expected to close next week.
BMO Capital Markets analyst Edward Sterck said the comments
on Diavik were not a surprise.
"I think after the Swatch transaction, they've got quite a
lot of flexibility," he said. "I took it to mean that they've
got the flexibility to take on additional funding if required.
The company's not terribly leveraged."
Sterck said the fourth-quarter results were slightly below
his forecasts because of higher costs, but he said there was
"nothing to get too worried about".
Dominion's shares rose 3.4 percent to $16.26 in thin trade
on the New York Stock Exchange on Thursday.